When I use the word retirement the 23 year old (at whom my book Retire Rich: Invest Rs. 40 a day) is really targeted may or may not pay attention. Which is fair enough because this person’s parent is still in service…so where is the question of this kid thinking/ worrying about retirement?

However, this generation is MORE likely to do the following:

• take breaks between jobs
• work for 7 months in a year and take 5 months off for vacation
• take a 5 year break for having a baby
• take 2 years off to nurse a parent/ sibling / friend
• make career changes 2/3 times in their lives

this taking breaks between jobs – maybe voluntary or compulsory. I hear about 43 year old cashiers, depot-in charge, sales support people, administration staff being laid off. They are mostly not very qualified, stuck to one expensive location, incapable of finding another job, so they do need a solution.

People will have many breaks – which means people should be ready for Flexible Retirement Plans. This should allow people the freedom of how much to invest…AND FAR MORE IMPORTANTLY ..the flexibility to withdraw when they need to.

This kinda flies in the face because I like pension products with lock in. If there is no lock in people are not serious about the accumulation and withdraw at the drop of a hat.

However if a person is changing his career at 34, loses his job at 43 and gets it back at 44, takes 5 months off for nursing his parent at age 49, has cancer at 55, takes up a job at 56 – see the number of times he needs to touch the Retirement corpus.

Of course there are solutions. Keep a core retirement basket which you will touch only when you are REALLY fully retired by choice. That could mean age of 60 for most of us – some professions have a diff retirement age. However once a person has contributed for say 15 years some portion of the accumulation should become free for withdrawal. Or he/she should create 2 retirement baskets – one to be touched at the age of 60 (obviously the big portion) and one which should be available for shorter breaks.

Why should it be a retirement fund and not just an ordinary accumulation of money?

Simply because once you label it as a pension fund or retirement money, you will NOT TOUCH IT for any other reason. The accumulation here will not tempt you to buy some asset or take a vacation, etc. Yes you might use it for taking a sabbatical (I am calling this voluntary) or for quitting your job and starting a business. Great. That is exactly where this money should be used. Not for buying usage or show off assets. For that create a separate ‘Goal based’ targeted fund/ schemes.

Of course if you are like me…the accumulation stage and the withdrawal stage may be happening over a longer period of time..ha..that is another topic!!